Suit Claims Tax Funds Misused : City of Industry: A group of businessmen allege conflicts of interest by the city, its mayor, two councilmen and the city attorney.

INDUSTRY — A group of businessmen charges in a lawsuit that an array of city officials are misusing taxpayers' money by awarding land leases and garbage-hauling contracts to each other.

The lawsuit, filed Wednesday in Los Angeles County Superior Court in Pomona, names the city, its mayor, two councilmen and the city attorney. It accuses them of several conflicts of interest involving waste-hauling contracts held by a firm owned by Councilman Patrick Perez, and leases of city-owned land to Mayor John Ferrero and his son, Councilman John Paul Ferrero.

The suit says City Atty. Graham Ritchie helped arrange the deals.

The three plaintiffs, Edward Roski, Edward P. Roski Jr. and John Curci, are Industry developers who claim that their property tax money is being misused by a city with only 207 registered voters and little public accountability.

"We are just sick and tired of having our property taxes raised to line the pockets of public officials in this city," the younger Roski said in a prepared statement. "These people operate without any checks or controls, and we intend to do something about that."

Perez said Thursday that he had not seen the lawsuit and declined to comment. The Ferreros did not return telephone calls Thursday. Ritchie was on vacation and could not be reached for comment.

The suit raises questions about city-owned land that the Ferreros use as ranchland. Ferrero and his son sublease 1,800 acres of city-owned vacant land for cattle grazing and farming from Harold Arnold, a San Bernardino County resident. They use free of charge another 600 city-owned acres.

City officials have justified the Ferreros' use of city-owned land, saying they are providing weed abatement service by grazing cattle there. The suit claims that the Ferreros are subleasing the 1,800 acres at a fraction of the current market value.

Their monthly sublease fee could not be determined.

The suit also focuses on the city's waste-hauling contracts with a firm owned by Perez and his brothers. The firm, City of Industry Disposal Co., has held city contracts since 1970.

Although Perez was not a councilman until 1983 and did not vote on the contracts, the lawsuit claims that the City Council extended the waste agreement to the year 2000 without bidding, in anticipation of his appointment to the council to replace Charles Rowland.

The land-lease and waste-hauling contracts were criticized in a 1985 Los Angeles County Grand Jury report on city business practices. City officials note that prosecutors have not challenged the legality of the contracts.

In addition, the suit claims that Perez and Mayor Ferrero have violated conflict of interest laws by voting to approve redevelopment projects near land they own, and financially benefiting when their property values increased as a result of the development. All of Industry's 11 square miles are zoned for redevelopment purposes.

Corruption allegations have long dogged the city. In a matter unrelated to the present lawsuit, the FBI and the U.S. attorney's office in 1984 jointly investigated a million-dollar construction kickback and bid-rigging scheme involving the 660-acre Industry Hills & Sheraton Resort.

As a result, Industry founder James Marty Stafford and five building contractors pleaded guilty to various criminal charges in connection with the case, and agreed to pay a total of $4.5 million in fines. Stafford served three years in a federal penitentiary.